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can you confirm if the property is the one and only consideration for 60% equity shares?
And if you still consolidated the property, what would be the credit entry for that to balance the goodwill entries?
For 60% yes – I put 35m consideration as highest and best use (but i did did not make adj in ppe for that). On top of that you had to include fv of 10% of investment they had.
I mean if the consideration is 35m, it would be included in goodwill calculation and increase the goodwill. Right? and the entries would normally be:
Dr Goodwill
Dr FV adjustment ( in case net assets of acquiree increases in FV)
Dr share capital, pre-acquisition retained earnings of acquiree
Cr NCI
Cr consideration (the amount of investment in acquiree)So if we dont credit PPE, it must be credit entry elsewhere? I guess.
I also thought at first that I should keep the PPE. But then I realized that the building was given to the old shareholders in exchange for their 60%. So I assumed that they took it and left, it wasn’t like sale to the subsidiary. Also, as @phunguyen290699 said, the balance wasn’t balancing if I don’t remove it.
Did your assets=liability+equity at the end?Firstly, I adjust the fair value of 35m of the PPE by the entry (Dr PPE, Cr RE ), then I do the goodwill entry as normal. But suddenly my assets do not equal liabilties + equity by the amount of the PPE adjustment. Due to time pressure, I decided to equalize that by balancing method and move on to the next question.
But If I remember correctly, they chose to keep using the asset. Hence, I guess that the value of discontinuation was not valid as it was physically impossible despite the higher value.
I dont really remember the question in details. But I read in Study hub, it says “When measuring fair value, all characteristics of the asset/liability that a market participant would take into account should be reflected in the valuation. This could include the condition or location of the asset and any restrictions on the use of the asset”. the potential buyer who offer the price of 35m because of the location of assets. So I think FV is 35m.
Credit impaireds loans I said was a financial asset, then described accounting treatment
I had this exam but can’t remember the other part of Q2 along with the ethics question about Mr Chan, can you remember what the requirement was?
Week 2: Contingency Exam
Q1 : Relatively easy one
a) Significant influence on Associates
b) Associate to Sun conversion
c) Pre-populated question
d) Initial and Subsequent Lease AccountingQ2 : Ethics
??Q3 :
A) Revenue Recognition
Revenue Allocation
Provision on contingent liability – 12
B)?? – 8 Marks
C) Government Grants – 5 MarksQ4 :
Restructuring Costs – 25 Marks
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